Vitex, Inc. manufactures a popular consumer product and it has provided the foll

Question

Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system (1) Standard Quantity or Standard Price or Rate Standard Cost Inputs Direct materials Direct labor Variable manufacturing overhead Hours 2.40 pounds $16.50 per pound 1.00 hours$15.30 per hour 1.00 hours $39.60 $15.30 $ 9.50 $64.40 $ 9.50 per hou:r Total standard cost per unit Total Variances Reported Standard Price Quantity or or Rate Efficiency Cost* Direct materials $712,800 $13,108 F 33,000 U $275,400 $ 3,800 U 15,300 U Direct labor Variable manufacturing overhead $171,000 4,900 F Applied to Work in Process during the period The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored Required: 1. How many units were produced last period? 2. How many pounds of direct material were purchased and used in production? 3. What was the actual cost per pound of material? (Round your answer to 2 decimal places.) 4. How many actual direct labor-hours were worked during the period? 5. What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.) 6. How much actual variable manufacturing overhead cost was incurred during the period?

Explanation / Answer

1) No. of units produced :-

= Total Standard Cost / Standard Cost per unit

= $712800 / $39.60

= 18000 units

2) Pounds of direct material purchased and used in production :-

Material Quantity Variance = (Standard Quantity - Actual Quantity)*Standard Price

Actual Quantity = Standard Quantity - (Material Quantity Variance/Standard Price)

Actual Quantity = (18000*2) - (-$33000/$16.50)

Actual Quantity = 36000 + 2000

Actual Quantity = 38000 pounds

3) Actual Cost Per Pound :-

Material Price Variance = (Standard Price - Actual Price) * Actual Quantity

Actual Price = Standard Price - (Material Price Variance / Actual Quantity)

Actual Price = $16.50 - ($13108 / 38000)

Actual Price = $16.50 - $0.35

Actual Price = $16.15 per hour

4) Actual Direct Labour Hours Worked :-

Direct Labour Efficiency Variance = (Standard Hours - Actual Hours) * Standard Rate

Actual Hours = Standard Hours - (Direct Labour Efficiency Variance / Standard Rate)

Actual Hours = 18000 - (-$15300/$15.30)

Actual Hours = 18000 + 1000

Actual Hours = 19000 Hours

5) Actual Rate Per Direct Labour Hour :-

Labour Rate Variance = (Standard Rate - Actual Rate) * Actual Hours

Actual Rate = Standard Rate - (Labour Rate Variance / Actual Hours)

Actual Rate = $15.30 - (-$3800 / 19000)

Actual Rate = $15.30 + 0.2

Actual Rate = $15.50 per hour

6) Actual Variable Overhead Cost :-

Actual Variable Overhead Cost = Standard Overhead + Unfavourable Variance

= $171000 + $4600

= $175600

Unfavourable Variance = (18000-19000)*$9.5 + $4900

= -$9500 + $4900

= -$4600

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